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Dow average drops 513, worst drop since 2008

August 4, 2011 12:00:00 AM PDT
The Dow Jones industrial average plunged 513 points on Thursday, marking the biggest one-day drop since December 2008.

There is concern among investors that the U.S. economy will enter another recession and that Europe's debt problems are not even close to being solved.

The Dow is closing with a loss of 4.3 percent, to 11,384. Also, major stock indexes fell 10 percent ore more from their previous highs. A drop of 20 percent or more signifies the start of a bear market, an extended period of stock declines.

The Vix, a measure of investor fear, shot up 26 percent.

The S&P 500, the benchmark for most mutual funds, lost 60.02, or 4.8 percent, to 11,383.68. Thursday's losses turned the blue-chip stock index negative for the year. The Nasdaq composite shed 136.68, or 5.1 percent, to 2,556.39.

Nearly 20 stocks fell for every one that rose on the New York Stock Exchange.

Stock trading has been volatile this week because of concerns that the U.S. economy is weakening. Manufacturing, consumer spending and hiring by private companies are below levels that are consistent with a healthy economy.

The stock market as a whole had its biggest fall since the start of the current bull market in March 2009. The drop in the S&P was the largest since a 45-point decline on January 20, 2009. The Dow is down 1.7 percent for the year. The S&P 500 is down 4.6 percent. And the Nasdaq is down 3.6 percent. The Russell 2000, an index made up of small companies, has fared the worst. It was down 5.6 percent Thursday and is down 7.3 percent for the year.

The Associated Press contributed to this report.

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